Hi, I have Dell Vostro 3700 too and I'm experiencing the same problem. I'm using Gentoo with latest stable kernel (2.6.36) and nvidia-drivers (260.19.29).

Furthermore I've tried nvidia-bl module provided by mactel, which was a partial success - I can control the brightness from command line via /sys/devices/virtual/backlight/nvidia_backlight/brightness. The remaining problem is that when I switch on/off compositing in KDE4, "something" resets the brightness level to the value that was set by Fn keys last time (my wild guess is that nvidia-driver remembers what was set by Fn keys and resets it).